Hedge Funds Are Coming Back To KBR, Inc. (KBR)

We at Insider Monkey have gone over 866 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st. In this article, we look at what those funds think of KBR, Inc. (NYSE:KBR) based on that data.

KBR, Inc. (NYSE:KBR) shareholders have witnessed an increase in activity from the world’s largest hedge funds lately. KBR, Inc. (NYSE:KBR) was in 31 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 38. Our calculations also showed that KBR isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

According to most stock holders, hedge funds are viewed as underperforming, old investment tools of yesteryear. While there are over 8000 funds trading today, We choose to focus on the leaders of this club, around 850 funds. Most estimates calculate that this group of people preside over the majority of all hedge funds’ total asset base, and by monitoring their first-class picks, Insider Monkey has unearthed a few investment strategies that have historically beaten Mr. Market. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Stan Druckenmiller DUQUESNE CAPITAL

Stanley Druckenmiller of Duquesne Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind let’s take a peek at the key hedge fund action regarding KBR, Inc. (NYSE:KBR).

Do Hedge Funds Think KBR Is A Good Stock To Buy Now?

Heading into the second quarter of 2021, a total of 31 of the hedge funds tracked by Insider Monkey were long this stock, a change of 7% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in KBR over the last 23 quarters. With hedgies’ sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).

Among these funds, Suvretta Capital Management held the most valuable stake in KBR, Inc. (NYSE:KBR), which was worth $135.3 million at the end of the fourth quarter. On the second spot was Impactive Capital which amassed $102 million worth of shares. Scopia Capital, 40 North Management, and Millennium Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Impactive Capital allocated the biggest weight to KBR, Inc. (NYSE:KBR), around 12.62% of its 13F portfolio. Scopia Capital is also relatively very bullish on the stock, dishing out 11.54 percent of its 13F equity portfolio to KBR.

As one would reasonably expect, key money managers were breaking ground themselves. Impactive Capital, managed by Lauren Taylor Wolfe, established the most outsized position in KBR, Inc. (NYSE:KBR). Impactive Capital had $102 million invested in the company at the end of the quarter. David S. Winter and David J. Millstone’s 40 North Management also made a $77.4 million investment in the stock during the quarter. The following funds were also among the new KBR investors: Michael Doheny’s Freshford Capital Management, Stanley Druckenmiller’s Duquesne Capital, and Phil Frohlich’s Prescott Group Capital Management.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as KBR, Inc. (NYSE:KBR) but similarly valued. We will take a look at Perrigo Co Plc (NYSE:PRGO), Ashland Global Holdings Inc. (NYSE:ASH), Owl Rock Capital Corporation (NYSE:ORCC), Janus Henderson Group plc (NYSE:JHG), Essent Group Ltd (NYSE:ESNT), 1Life Healthcare, Inc. (NASDAQ:ONEM), and Stag Industrial Inc (NYSE:STAG). All of these stocks’ market caps are closest to KBR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PRGO 33 397635 2
ASH 36 1199148 -2
ORCC 20 309298 0
JHG 28 917244 6
ESNT 24 332686 -8
ONEM 30 750776 0
STAG 17 173064 -8
Average 26.9 582836 -1.4

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.9 hedge funds with bullish positions and the average amount invested in these stocks was $583 million. That figure was $1046 million in KBR’s case. Ashland Global Holdings Inc. (NYSE:ASH) is the most popular stock in this table. On the other hand Stag Industrial Inc (NYSE:STAG) is the least popular one with only 17 bullish hedge fund positions. KBR, Inc. (NYSE:KBR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for KBR is 68.3. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 22.8% in 2021 through July 2nd and beat the market again by 6 percentage points. Unfortunately KBR wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on KBR were disappointed as the stock returned 0.3% since the end of March (through 7/2) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.